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HomeMy WebLinkAbout5 - Recommendation concerning a water right sale to the town of Ward and provision of fire protectioCITYOFBOULDER WATER RESOURCES ADVISORY BOARD AGENDAITEM MEETING DATE: September 20, 2004 AGENDA TITLE: Public Hearing and WRAB recommendation concerning a water right sale to the town of Ward and provision of fire protection services to the city's Silver Lake Watershed PRESENTER: Carol Ellinghouse, Water Resource Coordinator EXECUTIVE SUMMARY: The town of Ward is located north of Nederland and south of Estes Pazk along the Peak to Peak Highway It is a small tustonc mmmg commumty The town provides fire protechon for its residents and sunoundmg areas through the Indian Peaks Fire Protection Distnct. The Indian Peaks Distnct is a volunteer fire distnct staffed by firefighters who lrve m the town of Ward The city of Boulder owns lands wrthm the Silver Lake Watershed to the south and west of Ward, and some of these lands are wrthm the boundanes of the Indian Peaks Distnct The crty has previously pazd the Distnct about $300 per year in heu of ta~ces to offset impact to the Distnct from mazntunmg its readmess to serve the city's taac-exempt land w~th fire and emergency services. The town of Ward mamtams a water supply system to serve residents within the town's corporate boundanes and as a source of supply for the Indian Peaks Fire Protection Distnct The water system is supphed by alluvial wells Recently, the State Engmeer's Office has nohfied the town that the operatron of the town wells is not in accordance wrth state water law, and the town must provide a source of augmentatron water to offset the depletrons to the nver alluviuxn caused by use of the wells Boulder owns shares m the Left Hand Ditch Company that were acqmred by the crty's Uhhhes Divis~on m the 1950's when purchasmg land where Boulder Reservoir is now located This water had been used for agncultural imgahon of this land Since that hme, the city has leased use of that water on an annual basis to other irngators under the Left Hand system with net revenues to the crty of about $25 per year. Tkus water has never been used withm Boulder's mumcipal water supply system because rt is decreed for agncultural use, and it diverts from the Left Hand basm, not the Boulder Creek basm. It would require a change of use proceedmg through the Division 1 Water Court m Greeley to allow the water to be used for mumcipal purposes by Boulder. This effort would require expendrtures for legal and engmeenng work of about $60,000 and likely result m AGENDA ITEM #~PAGE ~ large return flow requirements to the Left Hand basm wrth a yield of a httle as 2 acre-feet to the city system The Left Hand Ditch shares would make a smtable augmentarion supply for the town of Ward's water system smce rts deplerions aze to Left Hand Creek Ward would need to obtatn a decree from the water court to allow this water to be used to augment its mumcipal wells Ward has a defined water service area that is l~mited by mountam topography Ward has agreed that rt will not supply mumcipal water outside the presently defined Ward Service Area or, if the town does, the Left Hand water will revert back to crty of Boulder ownership Fiscal Impacts: Budgetary The city will convey water nghts to the town of Wazd that aze worth approximately $5,000 and are not presently usable m the city's water system. The crty will discontinue payments m heu of taaces to the Indian Peaks Fire Protection Distnct of $300 per year far at least the next 20 yeazs. The city will no longer enter mto annual leases of the water for agncultural use and will forgo net revenues of about $25 per year. Up to $1,000 will be reqwred for outside special water counsel services to momtor Wazd's water court change of use proceedmgs No addihonal fundmg would be required m addrtion to current budget resources Staff Time Less than 10 hours of staff hme will be required to complete the conveyance of the water nghts, provide any teshmony necessary regazdmg the histonc use of the water, and to momtor Ward's water court change of use proceedmgs Other Impacts: Intergovernmental The city will enter into an intergovernmental agreement wrth the town of Wazd and the Indian Peaks Fire Protechon Distnct that will allow the Ward mumcipal water system to conhnue operahng and will prov~de fire protection services for the c~ty of Boulder's Silver Lake Watershed lands for 20 years Economic. The town of Wazd would obtam a means to conrinue operahng rts water supply system that is less expensive than other optrons. The crty would reduce the value of its water nghts portfoho, however, an otherwise underused asset would be workmg m a manner benefic~al to the city by offsettmg current expendrtures for fire protechon. Commumty The town of Ward will be limited in rts future abihty to supply water outside of rts presently defined service area without losmg the nght to use the Left Hand water. Agncultural users that presently may, at the crty's electron, have the water made available for annual lease will no longer have this ophon. No agncultural user is dependent on this water as their only source of supply and the lack of this water for agncultural use m the future should have mmimal or no impact on the agncultural community AGENDA ITEM # ~ PAGE Z' Other Board and Commission feedback: none Staff recommendation: Staff recommends that the WRAB approve a recommendation to City Council to approve the Agreement for the Purchase of Water Rights and for the Provision of F~re Services (Attachment A) Analysis: Staff recommends that WRAB approve a recomxnendation to City Council that the Crty/Wazd/Indian Peaks Fire agreement be approved The Left Hand water nghts are presently an underused city asset. This agreement can mcrease the benefit that the city receives from tlus water m a cost-effecrive way Although sale of these water nghts will decrease the amount of water potenhally available for Boulder's mumcipal use, these nghts will hkely never be changed for use wrthm the city's water system The cost to pursue a water court proceedmg and the hmited }neld potenhal of the water nghts results m a cost of perhaps $30,000 or more per acre-foot of water made avazlable for the city's use It is not expected that Boulder will reqwre the development of new mumcipal water supphes m the future, but if this is necessary, other ophons are more cost-effective Through ttus agreement, the c~ty will contmue to receive fire protecrion for its Silver Lake Watershed lands without mcumng the present annual expense for payment m lieu of taxes to the Indian Peaks Fire Distnct Ward will be able to solve rts water supply problem m an affordable way to allow the existmg water service to ttte town to conhnue. Intergovernmental relatrons between the city and the town will be enhanced This agreement furthers crty goals of maximizing use of crty water supphes for beneficial purposes, efficiency of use of resources, mimmizmg operahonal expenditures, and furthenng positive relat~ons with neighbonng commumhes Options: WRAB may erther approve or disapprove a recommendation to Council for approvmg the agreement or may request staff to re-enter negohations wrth the town of Ward and Indian Peaks Fire to address specific concerns with the proposed agreement The ophons are as follows Status Quo: The city retams ownership of the Left Hand water and conhnues to lease it to agncultural users under the Left Hand Ditch system for net revenues of about $25 per yeaz The water remams available for potential future change through the water court to mumcipal use wrthm the city's water system Wazd erther finds another source of augmentation water or disconhnues operation of rts mumcipal water supply system wrth Ward residents dnlhng mdrndual wells or mstalhng cistems If Ward finds another source of augmentation water, the city contmues to pay about $300 per year to the Indian Peaks Fire Protection D~stnct If Wazd does not find another source of augmentahon water, the Indian Peaks Distnct loses a source of firefightmg water and the potenhal for wildfire m the AGENDA ITEM # ~ PAGE ~ city's Silver Lake Watershed and the associated water quahty effects mcreases No agreement exists that Ward will not provide water outside of rts presently defined water service azea WRAB recommendation to Council far approval with subsequeut Council approval: The crty trades a water asset worth approximately $5,000 that may have some hmrted potenrial to increase the yield of the mtuucipal water supply followmg a water court proceedmg. Boulder is relieved of payments of about $300 to the Indian Peaks Fire Protechon Distnct for at least 20 years Boulder loses net revenue of about $25 per yeaz from annual agncultural leases of the water Wazd contmues operahng rts mumcipal water supply system and contmues as a source of water supply for the Indian Peaks Distnct The abihty to protect the Silver Lake Watershed and dnnkmg water quahty from the effects of catash~ophic wildfire is enhanced. Wazd agrees that ~t will not provide water outside of its presently defined water service azea. Request staff to renegotiate the agreement Staff will reopen negotrahons to attempt to address any specific WRAB concerns Wazd and Indian Peaks have already given their formal approval to the agreement as wntten and may or may not be recephve to renegotiation Attachments: Attachment A. Agreement for the Purchase of Water Rights and for the Provision of Fire Servtces beriveen the City of Boulder, the Town of Ward and the Indian Peaks Fire Protechon Distnct AGENDA ITEM # ~ PAGE 1 Attachment A AGREEMENT FOR THE PURCHASE OF WATER RIGHTS AND FOR THE PROVISION OF FIRE SERVICES This Agreement for the Purchase of Water Rights and for the Provision of Fire Sernces ("AgreemenY') is entered into by and between the City of Boulder, a Colorado home rule city (the "City"), the Town of Ward, a Colorado home rule Town ("Ward"), and Indian Peaks Fire Protechon Distnct, a Colorado fire protechon distnct exishng pursuant to Art~cle 1, Title 32, C R.S. (the "Fire Distnct"). RECITALS A. Ward seeks to acquire shares m the Left Hand Ditch Company to use in an augmentahon plan. B. The City owns shares m the Left Hand Drtch Company which rt is willing to transfer. C. The City further owns land and facihhes located within the Fire District. Fire Suppression and rescue services for this property are provided by the Fire District. The Crty pays the Fire District a fee for providing these services D. The Fire Distnct obtams water for fire fighting and other purposes from Ward. The Fire District beheves it is m tbe Fire DistricYs best mterest to ensure the secunty and adequacy of Ward's water supply, and is willing to forego the fee currently paid by the City m order to assist accomphshing this ob~echve. AGREEMENT WHEREFORE, the parties agree as follows: E. Water Rights Conveved A. Sub~ect to the provisions of this Agreement, the City hereby agrees to sell the followmg described interests in water to wit: Five (5) shares of the caprtal stock of the Left Hand Ditch Company as evidenced by origmal certificate # 172 (the "Water") H ~PWBDSEC\WRAB4nemos~2004\WRABAftachmenlWard ag dce ~~~ B. Ward hereby agrees to buy the Water upon the terms and condirions stated herem. C. Ward shall provide water service to the Fire Distnct far fire fighhng and other purposes. As a result of Ward's acquisition of the Water, the Fire Distnct will have an improved and more reliable water supply than otherwise would be the case. The Fire Distnct agrees that the provision of the improved water supply is good and valuable considerahon, and suffic~ent to make this Agreement bmding upon the Fire Distnct. F. Pnce The purchase pnce for the Water shall be ten dollars ($10.00) payable m full by Ward's check at closing. G.Fire Protection The Fire Distnct agrees to provide the City with fire suppression and rescue services wrthin the extenor bounds of the Fire Distnct free of charge. This commrtment to provide free fire suppression and rescue services shall extend for a period of 20 years from the date of execurion of this Agreement, after which time the Fire Distnct no longer shall be required to provide free serv~ces to the City. The Fire District shall carry out this task to the best of its abihty and~udgment It is recognized that the Fire Distnct has limited resources, and must rely upon mutual aid assistance to fight any ma~or fires withm rts boundanes. It further is recogmzed that the Fire DistncYs authonty over w~ldland and forest fires is subject to the power of the County Shenff and the State of Colorado to assume responsibility for controlling and exhnguishing such fires. Under no circumstances shall the Fire Distnct or Ward be financially responsible to the City for any losses or damages suffered by the Crty m connechon wrth a fire. H.Service Area The Town of Ward shall refrain from supplying water to persons not parties to this Agreement outside the area shown on Exhibrt "B" as the "Ward H ~PWBDSEC\WRAB\memos~2004\WRABA[tachmen[Ward agr dce I~4 Service Area." This covenant shall remam m effect for so long as this Agreement is m effect I Trtle A. Sub~ect to payment or tender as above provided and comphance by Ward and the Fire Distnct with the other terms and provisions hereof, the C~ty shall execute and dehver a good and sufficient qurt claim deed for the Water wrthm 15 days of the date of execution of this Agreement by all parties, or by mutual agreement, at an earl~er date, conveying the Water free and clear of all taxes, hens, encumbrances, assessments, and leases. The City shall execute all such stock transfers or other documents as may be required by The Left Hand Ditch Company to effectuate the transfer of water shares m such company from the Crty to Ward. The City shall pay the current year's assessment. B. Except as stated m subparagraph 4 C, if title is not merchantable and written notice of defect(s) is given by Ward or the Fire Distnct on or before the closing date, the City shall, at its sole expense, use reasonable efforts to correct said defect(s) pnor to the closing date If the City is unable to conect said defect(s) on or before the closmg date, at the Crty's ophon, the date of closing shall be extended 30 days for the purpose of correchng said defect(s). If ritle is not rendered merchantable as provided m this paragraph, at either party's option, this Agreement may be declared to be void and of no effect, and each party hereto shall be released from all obligahons hereunder. C. Any encumbrance required to be paid shall be paid at ar before the hme of settlement from the proceeds of this transaction ar from any other source. J Water Court ProceedinQs A. Ward intends to use the Water to offset depletions to the stream caused by the operation of its water system. Court approval of this augmentarion plan will be requ~red. The City agrees that it will cooperate wrth Ward in this action by providmg informahon relevant to the histonc use of the sub~ect Water, mcludmg the execuhon of H ~PWBDSEC\WRABUnemos~2004\WRABA[tachmen[Ward agr doc ~~~ appropnate affidavrts and/ar the fumishing of tesnmony in appropnate admmistrahve or ~udicial proceedings with respect to said Water Ward agrees to reimburse the City for any out-of-pocket expenses mcurred m obtammg ar givmg such testimony or other mformahon The City further agrees that it will not challenge any water court apphcation filed by or on behalf of Ward, but the City may, at rts discrehon, participate m the case for monitoring purposes only by either fihng a statement of opposihon or by any other appropnate method. B. Ward shall bear all expenses of water court or other proceedings, if necessary, to obtain permission for Ward to make use of the Water. Ward agrees to pay any stock transfer fee in arder to transfer any certificate which is the sub~ect of this Agreement or any recordmg fees for this mstrument or any other instrument necessary pursuant to this Agreement. 7. Terminahon of A~reement A If Ward is unable to obtain approval of the water court apphcahon referenced in the preceding paragraph, this Agreement shall termmate and be of no further force or effect. B. If Ward determines that it is necessary or appropnate to provide water service to persons outside the area shown on Exhibit "B" as the "Ward Service Area," Ward shall be ent~tled to terminate this Agreement. Prior to any such termmation, Ward shall convey five (5) shares of the capital stock of the Left Hand Ditch Company to the Crty. These shares may but need not be the same shares conveyed to Ward under the terms of this Agreement. 8. Default A. If Ward or the Fire Distnct defaults on their obligahons under th~s Agreement, then all payments and thmgs of value received by the Crty hereunder shall be forferted by Ward and retamed by the Crty, and the Crty may recover such damages as may be proper. ~f ~ B. If the City defaults on its obligahons under this Agreement, then this Agreement shall terminate and Ward expressly wa~ves the remedies of specific performance and damages 9. Acceptance This Agreement is specifically condihoned upon its acceptance by the governing council or boazd of each of the three parties. Each of the parhes hereby represents that its govemmg council or board has accepted this Agreement. Copies of the resoluhons memonalizmg the acceptance are attached here as Exhibits "C" through "E." 10 Renresentahons and Warranhes By signing this Agreement, the Crty states that: A. This Agreement and the documents required to be delrvered by the City ("City's Documents") do not and will not contravene any provision of any currently apphcable law or regulation. This conveyance of the Water and the delrvery of this Agreement and the City's Documents will not result m a breach of, conshtute a default under, or require consent pursuant to, any credit Agreement, lease, mdenture, mortgage, deed of trust, purchase Agreement, guarantee, or other instrument to which the C~ty is presently a party or by which the City or its assets are presently bound or affected. B. Except as hereinafter set forth, there are no actual or, to the best of the City's knowledge, threatened ar contemplated suits, actions, or proceedings with respect to all or part of the Water (1) for condemnahon, (2) allegmg any violation of any currently applicable law or regulahon, ar(3) which could result m a hen or hs endens affechng all or any part of the Water. C. The City is the sole owner of all the Water and will not, prior to closing, assign, pledge, transfer, lease, or m any way encumber rts interesttherein. D. The City has full power and authonty to execute and deliver this Agreement and the City's Documents and to perform all obl~gahons ansmg thereunder. ~~I 11 Exvenses Except as expressly otherwise provided, the parties shall each pay their own costs and expenses in connection with the negotiahon, execution, and del~very of this Agreement. 12. Broker's Fee The City shall not be obhgated to pay any broker's commission or fee which may be claimed pursuant to this Agreement, and Ward and the Fire Distnct shall mdemmfy, defend and hold harmless the City from and agamst all loss, expense, damage, and liability from any services claimed to have been rendered m connechon with the transachon contemplated in this Agreement. 13. Entire Agreement This Agreement supersedes all pnor agreements and contains the complete and ent~re agreement between the parhes respechng negohahons, agreements, representations, and understandmgs, if any, between the parties conceming the Water. 14. Modifications This Agreement may not be modified, dischazged, or changed in any respect whatsoever, except by a further agreement m wnting duly executed by the parhes. However, any consent, waiver, approval, or authonzation shall be effective if signed by the party grantmg or makmg such consent, wazver, approval or authonzation. 15 Nohces All nohces under this Agreement shall be given by registered or cernfied mail, postage prepaid, directed as follows, and shall be deemed given on the date of maihng. If to the City: Public Works Director for Utihhes Crty of Boulder P.O. Box 791 H ~PWBDSEC\WRABlmemos~2004\WRABAt[achmen[Ward agr doc ~~~ Boulder, CO 80306 If to Ward: Town of Ward Water Deparhnent P.O. Box 124 Ward, CO 80481 With copy to: John G. Nelson Brega & Wmters P.C. 1700 Lincoln, Suite 1300 Denver, CO 80203 If to the Fire Indian Peaks Fire Protechon Distnct Dismct: P.O. Box 218 Ward, CO 80481 16. Successors and AssiQns The agreements herein contained shall bind and inure to the benefit of the respechve heirs, successors, and assigns of the parties hereto 17 Additional Documents or Achon The parties agree to execute or obtam any additional documents or take any additional action that is necessary to carry out this Agreement. 18. Survival of ClosinQ The representahons, covenants and warranhes provided in this Agreement and the nghts and obl~gahons of the parties hereunder shall survive the closmg and shall not merge m the mstruments dehvered at closmg DATED this day of , 2003. CITY OF BOULDER By H ~PWBDSEC\WRABUnemos~2004\WRABAt[achmentWard agr doc ~/1/ Ronald A. Secnst, Crty Manager ATTEST City Clerk on behalf of the Director of Finance and Record APPROVED AS TO FORM City Attorney TOWN OF WARD By: ATTEST. APPROVED AS TO FORM: John G. Nelson Special Counsel, Town of Ward H ~PWBDSEC\WRABtrnemos~2004\WRABA[tachmen[Ward agr doc ATTEST• ~/ ~ Z INDIAN PEAKS FIRE PROTECTION DISTRICT By ATTEST: APPROVED AS TO FORM: W. Bruce Joss Counsel, Indian Peaks Fire Protechon Distnct H ~PWBDSEC\W2ABtrnemos~2004\WRABA[tachmentWard agr doc ~1~3